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First payment due Monday. Reimbursements won't be enough, officials say. Most already making reductions
By Cheryl Powell
Beacon Journal medical writer
Published on Sunday, Nov 29, 2009
Hospitals say a new state fee is adding to their financial headaches.
By Monday, all hospitals statewide must pay the first of six installments of a new hospital franchise fee approved by lawmakers this year as part of the state's two-year budget.
State officials insist the hospitals will get the money back through higher Medicaid payments and foregone rate cuts that would have resulted in lost revenue.
But industry leaders say that isn't the case.
''The back-end reimbursements really don't seem to be covering the front-end taxes,'' said Dr. Jack Mitstifer, president of inpatient services for Akron General Medical Center.
The hospital expects to get back about $1.7 million of the $7.6 million it will pay during the next two years, including $1.4 million the hospital paid this month, he said.
''It's money that's not really available to invest in new equipment, new programs, in reinvesting in the organization as a whole,'' Mitstifer said. ''It has a pretty significant impact.''
The new assessment comes at a time when hospital officials say they're already struggling because of the ailing economy.
A report released last week by the Ohio Hospital Association found 39 percent of hospitals plan to reduce or eliminate services, and almost half are canceling or delaying expansions and renovations.
The report also found almost half of the hospitals statewide have already enacted layoffs.
Although the new fee isn't the sole cause of the cuts, this ''tax'' adds to the burden, said Tiffany Himmelreich, spokeswoman for the Ohio Hospital Association.
The group estimates hospitals statewide will pay about $718 million and get back $573 million.
Hospitals that treat a higher percentage of Medicaid patients will recoup a larger amount of the fee, she said.
''With the economy as it is, hospitals already were facing cost-cutting measures,'' Himmelreich said. ''What happened with this new tax is it poured salt on the economic wound.''
Local hospitals
Akron Children's Hospital is paying $8.2 million over the two-year period and expects to get back about 90 percent to 96 percent because roughly half its patients are covered by Medicaid, President and Chief Executive William Considine said.
However, Medicaid pays hospitals only about 84 cents for every $1 in patient care, according to the Ohio Hospital Association.
''It takes money away from patient care at a time when there's more demands being placed on organizations like us, more children who are uninsured, more children coming through our emergency department,'' Considine said.
Summit County's largest employer, Summa Health System, expects the fees for its six owned or affiliated hospitals to exceed the amount it gets back from the state by $16.8 million during the two-year period.
The health system is paying about $3 million to cover the first installment of the fee.
''We're suffering a pretty significant hit every month right now,'' Summa President and Chief Executive Thomas J. Strauss said.
Aultman Hospital in Canton is paying $1.3 million this month and a total of $4.8 million over the two-year period, according to Mark Wright, the hospital's chief financial officer.
For Mercy Medical Center in Canton, the new fee is costing about $807,000 this month and about $2.9 million during the first year.
''We understand the difficulty the state is facing in balancing the budget, but this tax is a huge new burden on hospitals,'' said Lynne Dragomier, spokeswoman for Mercy Medical Center. ''It's even harder to absorb this when you consider that we are providing increasing amounts of charity care for the uninsured in this economy while also serving as economic anchors in our community.''
Net return
Hospitals are required to pay a fee equal to 1.52 percent of their operating expenses during the first year and 1.61 percent the second year to help the state balance the budget.
The money is being used to help secure an estimated $1.7 billion in matching funds from the federal government over the two-year period, according to the Ohio Department of Job and Family Services.
It remains up for debate, however, how much money hospitals ultimately will get back through higher payments from the state-run Medicaid program and other methods.
The Job and Family Services Department estimates that hospitals collectively will pay $709.5 million and receive a total value of $825.4 million over the biennium because of state policy changes.
Those changes include higher Medicaid payments, as well as the state's decision to forgo lower payments and a plan that would have prohibited hospitals from negotiating rates with Medicaid managed-care plans, Job and Family Services spokesman Brian Harter said.
''By federal law, we cannot guarantee that any hospital will receive what it paid in,'' Harter said. ''But as an industry, we believe, the net return is positive.''
The Ohio Hospital Association's Himmelreich said it's not accurate to include savings from scrapped plans to lower Medicaid payments, because that proposal never was included in the budget.
The hospital industry is pleased to still be able to negotiate its payments from Medicaid managed-care plans, she said, but that isn't necessarily saving hospitals money.
The fee is supposed to stop at the end of the two-year budget, but hospital leaders are concerned it will be extended, Children's Considine said.
''What's going to happen in the next biennium, when the federal stimulus money may or may not be available?'' he asked. ''Even though this fee/tax is supposed to sunset, if the state is facing major budget issues, is the state going to try to keep this assessment in play without any federal matching dollars?''
Cheryl Powell can be reached at 330-996-3902 or chpowell@thebeaconjournal.com.
Hospitals say a new state fee is adding to their financial headaches.
Get the full article here.
Comments
Click here to post your comments
oakpark, CA
Posted 03:28 AM, 11/29/2009
you can get instant quality full coverage medical insurance for entire family at the best prize from http://bit.ly/7jAGD3
Akron, oh
Posted 08:25 AM, 11/29/2009
Government taxes. Obama care continues to Ohio. Tax is a Tax is a Tax.
Why doesn't government help Ohio to get jobs. This recession is caused by big government and will continue with big government leading the way.
Vote everybody out of office and start over please.
Fannie mae, Freddie Mac all led by liberal democrates. Akron a Democrate power. Notice how the economy fails with Plusquellic and the oteher democrates leading our city
Dade City, Fl
Posted 09:27 AM, 11/29/2009
Its not necessarily big government, its thieving and lying politicians in any government wehter city, county, state or fedral and the people that support them by buying them off such as PACs and lobbyists.
Arnoldsburg, WV
Posted 10:05 AM, 11/29/2009
Here we go again with Lie Detectors partisan misinformation rant. this is an Ohio state tax, not a federal tax, therefore it has absolutly nothing to do with Obama. Grow up and be a part of the solution, instead of always looking to place blame and whinning.
Both parties are responsible for raising taxes. guess you forgot Bush Sr. infamous speech. Read my lips no new taxes, then raised taxes anyway.
Orrville, Oh
Posted 05:15 PM, 11/29/2009
Representatives of this Representative Republic using hospitals to scam patients for operating fees is defiant of demands of Natural Law: what Mother Nature, God, or Whatever Power decreed to be the reality of the real world, God, democracy, capitalism, the US Constitution, and free, fair, and affordable commerce.
Demanding every hospital, corporation, farmer, business, outsourcer sweatshop, and nonprofit, tax-exempt, organization and Church; markets the cost; in the wholesale and retail price of his or her product and service; Of every patient, workers, consumers, and taxpayers living (including pension and health care); enabling parents to love, nurse, nurture, discipline, protect, and provide for every child (job) they conceive; and fund schools, infrastructure, national security, government services, and etc.; with money derived from wages or independent business profit!
